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<SEC-DOCUMENT>0001047469-09-006616.txt : 20100803
<SEC-HEADER>0001047469-09-006616.hdr.sgml : 20100803
<ACCEPTANCE-DATETIME>20090701204026
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001047469-09-006616
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090701

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FORGENT NETWORKS  INC
		CENTRAL INDEX KEY:			0000884144
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
		IRS NUMBER:				742415696
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		108 WILD BASIN RD
		CITY:			AUSTIN
		STATE:			TX
		ZIP:			78746
		BUSINESS PHONE:		5124372700

	MAIL ADDRESS:	
		STREET 1:		108 WILD BASIN RD
		CITY:			AUSTIN
		STATE:			TX
		ZIP:			78746

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FORGENT NETWORKS  INC
		DATE OF NAME CHANGE:	20020215

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	VTEL CORP
		DATE OF NAME CHANGE:	19960401

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	VIDEO TELECOM CORP
		DATE OF NAME CHANGE:	19960401
</SEC-HEADER>
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<TYPE>CORRESP
<SEQUENCE>1
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</FONT> <FONT SIZE=2>
July&nbsp;1, 2009 </FONT></P>

<P ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>direct
dial: 817.420.8225<BR>
jhoover@winstead.com </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> <U>Via Federal Express</U>  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>Ms.&nbsp;Song
P. Brandon<BR>
Division of Corporation Finance<BR>
Securities and Exchange Commission<BR>
100&nbsp;F. Street, N.E.<BR>
Washington, D.C. 20549 </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>Re:</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Response
to Comments Received from the Staff of the Commission with respect to the Preliminary Proxy Statement on Schedule&nbsp;14A filed June&nbsp;19,
2009 (File No.&nbsp;0-20008) and the Definitive Soliciting Materials filed on June&nbsp;17, 2009 (File No.&nbsp;0-20008) of Forgent Networks,&nbsp;Inc. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>Dear
Ms.&nbsp;Brandon: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
legal counsel to Forgent Networks,&nbsp;Inc. (the "Company"), this letter sets forth the responses of the Company to the comments of the staff of the Division of Corporation Finance
(the "Staff") of the Securities and Exchange Commission (the "Commission") received by letter dated June&nbsp;24, 2009 (the "Comment Letter") with respect to the above-referenced Schedule&nbsp;14A
(the "Schedule&nbsp;14A" or "Proxy Statement") and Definitive Soliciting Materials (the "June&nbsp;17th Letter"). Enclosed herewith is one clean and one black-lined copy of Amendment No.&nbsp;1
to the Schedule&nbsp;14A, which, in response to the Comment Letter, includes revisions to the Schedule&nbsp;14A. Also enclosed is a copy of the Company's acknowledgment letter in response to the
request contained on the last page of the Comment Letter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the convenience of the Staff, we have set forth below, in boldface type, the number of each comment in the Comment Letter followed by the Company's responses thereto. After each of
our responses below, we have also provided the citations from each comment in the Comment Letter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><U>Preliminary Proxy Statement on Schedule&nbsp;14A</U> </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>1.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We have revised the disclosures within the Proxy Statement as requested by adding a background discussion of
the contacts the Company has had with Pinnacle Fund, LLLP, a dissident stockholder group controlled by Pinnacle Partners,&nbsp;LLC which is partly controlled by Red Oak Partners,&nbsp;LLC
("Pinnacle/Red Oak"), during the time period leading up to the current solicitation, in a new subsection entitled "Background to Current Solicitation" on Page&nbsp;5 of the amended Proxy Statement.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>2.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We have revised the disclosures within the Proxy Statement as requested by explaining why the Board of
Directors believes it is not in the best interests of stockholders to sign or return any proxy cards provided by Pinnacle/Red Oak under the subsection entitled "Dissident Slate of Nominees" on
Page&nbsp;6 of the amended Proxy Statement.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>3.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We have revised the disclosure as requested. </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Item&nbsp;4(b) of Schedule&nbsp;14A)</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>4.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We have revised the Proxy Statement by adding page numbers as requested. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2><U>Cover Letter</U> </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>5.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We have revised the disclosure as requested. </FONT></DD></DL>
<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2><U>Introductory Section</U> </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>6.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We understand that all written soliciting materials, including any scripts to be used in soliciting proxies
over the telephone, must be filed under the cover of Schedule&nbsp;14A. </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Rule&nbsp;14a-6(b) and (c)</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2><U>Voting Securities Outstanding: Quorum</U> </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>7.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We have revised the disclosure as requested. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2><U>Election of Directors</U> </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>8.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We have revised the disclosure as requested. </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Rule&nbsp;14a-4(d)</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>9.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We confirm that should the Company identify or nominate substitute nominees before the Company's upcoming
Annual Meeting of Stockholders (the "Annual Meeting"), the Company will file an amended proxy statement that (1)&nbsp;identifies the substitute nominees, (2)&nbsp;discloses whether such nominees
have consented to being named in the amended proxy statement and to serve if elected, and (3)&nbsp;includes the disclosures required by Items&nbsp;5(b) and 7 of Schedule&nbsp;14A with respect to
such nominees. </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Item&nbsp;5(b) and Item&nbsp;7 of Schedule&nbsp;14A</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2><U>Potential Payments Upon Termination or Change-in-Control</U> </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>10.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The disclosure has been revised to discuss in greater detail the triggering events under the parachute
payments for each of the Company's three named executive officers. Only two of the agreements involve potential change of control payments, and those payments would not be triggered by the election of
Pinnacle/Red Oak's entire slate of director nominees, but rather by a later termination, if any, of the named executive officer. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2><U>Form of Proxy Card</U> </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>11.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We have revised the form of proxy as requested. </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Rule&nbsp;14a-6(e)(1)</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>12.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The Company does not intend to adjourn the Annual Meeting to solicit additional proxies. The Company only
plans to adjourn the Annual Meeting if a quorum is not present. Accordingly, the Company has not revised the Proxy Statement to include a separate adjournment proposal. </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Rule&nbsp;14a-4</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2><U>Definitive Soliciting Materials Filed on June&nbsp;17, 2009</U> </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>13.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We understand that, until the Company has a definitive proxy statement on file with the Commission,
materials other than a revision to a preliminary proxy statement should be used with the EDGAR tag "DEFA 14A" and contain the appropriate disclosure set forth in Rule&nbsp;14a-12(a). </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Rule&nbsp;14a-6(o)</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2</FONT></P>

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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>14.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You have requested supplemental support for the Company's assertion that Pinnacle/Red Oak's express
intentions include "launching a hostile and costly proxy contest." The following examples are illustrative: </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the second paragraph of an email dated January&nbsp;29, 2009 from David Sandberg (a principal of Pinnacle/Red Oak) to the Company's CFO, Jay Peterson,
Mr.&nbsp;Sandberg stated: "I further propose that if this going private is to occur, the board be replaced and entirely consist of large shareholders in order to ensure there are no conflicts." A
copy of this email is attached hereto as <U>Exhibit&nbsp;A</U>. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the opening paragraph of Pinnacle's May&nbsp;27, 2009 letter to the Company, whereby Pinnacle/Red Oak submitted its director nomination materials, Pinnacle/Red Oak
stated: "We intend to deliver a proxy statement and form of proxy to holders of at least the percentage of the Common Stock required under applicable law to elect our nominees." </FONT> <FONT SIZE=2><I>See</I></FONT><FONT SIZE=2> Exhibit&nbsp;A to
Pinnacle's Schedule&nbsp;13D, Amendment No.&nbsp;4 filed with the Commission on May&nbsp;29, 2009 (please note that the
letter actually faxed by Pinnacle to the Company was dated May&nbsp;27th&nbsp;although the letter attached as Exhibit&nbsp;A was dated May&nbsp;28th). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the next to last paragraph of Pinnacle's press release dated June&nbsp;4, 2009, David Sandberg stated: "Although clearly prepared to do so, we hope to not have to
engage ASUR in another costly proxy contest and instead wish to work with its Board as soon as possible towards cost reductions and Board elections." </FONT> <FONT SIZE=2><I>See</I></FONT><FONT SIZE=2> Pinnacle/Red Oak's Schedule&nbsp;14A filed with
the Commission on June&nbsp;5, 2009 (please note that this filing also lacks the information
required by Rule&nbsp;14-12(a)(1)(i), as indentified in your Comment #18). These statements support the Company's above-referenced assertion.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>15.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You have requested supplemental support for the Company's statement suggesting that Pinnacle/Red Oak "has a
self-serving agenda." </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2><I> <U>Apparent Asset Play Strategy:</U>  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>As
previously indicated in the Company's Definitive Additional Soliciting Materials filed with the Commission on May&nbsp;14, 2009 (File No.&nbsp;02-20008) (the
"May&nbsp;12th&nbsp;Letter"), the Company believes that Pinnacle/Red Oak's true intentions involve an asset play strategy. This belief is based on, among other items, the following (please note
that we have redacted certain personal identifying information from the various correspondence attached as exhibits hereto): </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
email dated November&nbsp;26, 2008 from David Sandberg to Pinnacle/Red Oak's outside counsel and to the Company's CFO, Jay Peterson, Mr.&nbsp;Sandberg evidenced
Pinnacle/Red Oak's intention to make hostile moves on one or more unnamed target companies. Specifically, he noted the "Key difference [between his new proposed deals and the prior
deals] is that- where the prior ones were openly friendly, for these we want to reserve the right to be more active." He went to say that "of course
[we'd] like to keep the language as ambiguous as possible because we'd be worried about the companies spending real $s fighting us as soon as we announce our tenders." A copy
of the above-referenced email is attached hereto as <U>Exhibit&nbsp;B</U>. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
email dated December&nbsp;2, 2008, from David Sandberg to Mr.&nbsp;Peterson, Mr.&nbsp;Sandberg stated that "the tender question is moot&#151;I'd stay
below a poison pill level regardless." This statement reflects Mr.&nbsp;Sandberg's familiarity with corporate anti-takeover defenses and sensitivity to any perceived aggression by
Pinnacle/Red Oak on the part of the Company. A copy of the above-referenced email is attached hereto as <U>Exhibit&nbsp;C</U>. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Later
in December 2008, Mr.&nbsp;Sandberg called Mr.&nbsp;Peterson and indicated that he considered the Company as an "asset play." Given that the Company's published
financial statements reflected cash reserves in excess of $10&nbsp;million with a current market capitalization of </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>3</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>approximately
$3&nbsp;million, Mr.&nbsp;Peterson understood this to mean that Mr.&nbsp;Sandberg thought that by taking control of the Company and liquidating it
(</FONT><FONT SIZE=2><I>i.e.</I></FONT><FONT SIZE=2>, an "asset play"), he could make a quick profit. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
May&nbsp;4, 2009, the following excerpt was posted on the Hackensack Blog (available at
http://thehackensack.blogspot.com/2009/05/penny-ante-arbitrage-update-iii.html): </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>David
Sandberg of Red Oak Partners was kind enough to spend a few minutes on the phone with me discussing this today, and, in addition to reiterating some of the points in his two letters to Asure's
management, he mentioned that he invested in this stock with a higher price target in mind than 36 cents per share. He said that he could have easily had an assistant open a bunch of accounts holding
749 shares each, but he thought he could unlock more value by getting more effective management in place. He noted the cash on the company's balance sheet, that both of the company's businesses are
high-margin ones, and said he thought a 70 cent price target was reasonable for the stock, given more effective management. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>The
above communications from Mr.&nbsp;Sandberg to the Company (</FONT><FONT SIZE=2><I>e.g.</I></FONT><FONT SIZE=2>, comments relating to the Company's balance sheet and a 70 cent price target) are
consistent with a contemplated asset play. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> <U>Stock Acquisition Patterns:</U>  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>Pinnacle/Red
Oak's acquisitions of the Company's common stock are also consistent with a possible "asset play" strategy. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pinnacle/Red
Oak began acquiring a significant number of shares of the Company's common stock beginning on February&nbsp;2, 2009. </FONT> <FONT SIZE=2><I>See</I></FONT><FONT SIZE=2> Appendix&nbsp;A to Pinnacle/Red Oak's definitive proxy statement filed with the
SEC on May&nbsp;28, 2009. The February date is significant
because it occurred two days after the Company first publicly announced its intentions to pursue a going private transaction and Pinnacle/Red Oak had not acquired additional shares since
December&nbsp;31, 2008. From February&nbsp;2, 2009 through
March&nbsp;16, 2009, Pinnacle/Red Oak acquired an additional 1,113,031 shares, increasing its ownership in the Company from approximately 3.51% to approximately 7.35%. </FONT> <FONT SIZE=2><I>See</I></FONT><FONT SIZE=2> Pinnacle/Red Oak's initial
Schedule&nbsp;13G filing on February&nbsp;23, 2009 and initial Schedule&nbsp;13D filing on April&nbsp;20, 2008.
On April&nbsp;17, 2009, Pinnacle/Red Oak delivered a letter to the Company's Board of Directors criticizing management, discouraging the Company's pursuit of a going private transaction, and
identifying its intent to nominate a dissent slate of directors. </FONT><FONT SIZE=2><I>See</I></FONT><FONT SIZE=2> Exhibit&nbsp;A to Pinnacle/Red Oak's Schedule&nbsp;13D (Amendment No.&nbsp;1)
filing on May&nbsp;4, 2009. The Company believes that these stock acquisitions were designed to magnify Pinnacle/Red Oak's standing as a stockholder and consequently dissuade the Company from
proceeding with its going private proposal. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;21, 2009, the Company filed its definitive proxy statement relating to the going private proposal. As indicated in Exhibit&nbsp;A to Pinnacle/Red Oak's
Schedule&nbsp;13D (Amendment No.&nbsp;5) filing with the Commission on June&nbsp;17, 2009, Pinnacle/Red Oak acquired 66,279 additional shares of Company common stock from May&nbsp;19, 2009
through May&nbsp;21, 2009, but did not acquire any additional shares over the final 11&nbsp;days leading up to the special stockholders meeting scheduled for June&nbsp;2, 2009 (the "Special
Meeting"). The Company believes that the lack of additional acquisition activity may reflect the chilling effect that the going private proposal (as evidenced by the Company's decision to proceed with
a definitive proxy filing) would have on a pending "asset play," given that a successful going private transaction would preclude future public trading of the Company's common stock unless market
makers would opt to create such a market on the Pink Sheets. Without a public market for trading shares, it would be extremely difficult to carry out an asset play and the recoupment of the costs
previously incurred to increase a stock position might be jeopardized in the short-term. </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4</FONT></P>

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<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following
the announcement of the cancellation of the Special Meeting on June&nbsp;1, 2009, Pinnacle/Red Oak resumed its acquisition of Company common stock, acquiring
820,401 additional shares during the period between June&nbsp;3, 2009 and June&nbsp;29, 2009. </FONT><FONT SIZE=2><I>See</I></FONT><FONT SIZE=2> Pinnacle/Red Oak's (i)&nbsp;Schedule&nbsp;13D
(Amendment No.&nbsp;5) filed on June&nbsp;17, 2009, (ii)&nbsp;Schedule&nbsp;13D (Amendment No.&nbsp;6) filed on June&nbsp;18, 2009, (iii)&nbsp;Schedule&nbsp;13D (Amendment
No.&nbsp;7), Form&nbsp;3, and Form&nbsp;4 filed on June&nbsp;23, 2009, and (iv)&nbsp;Form&nbsp;4 filed on June&nbsp;29, 2009. As a result of these stock acquisitions, Pinnacle/Red Oak
has increased its shareholdings in the Company from approximately 7.35% before the Special Meeting to approximately 10.2% as of June&nbsp;29, 2009. The Company believes that this resumption of
significant acquisition activity following the defeat of the going private proposal demonstrates Pinnacle/Red Oak's intention of acquiring control of the Company without having to pay a premium for
the acquired shares.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>16.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You have requested supplemental support for the Company's statement that "Pinnacle is attempting to seize
control of your company without a tender offer, a deceptive tactic they have used to fool investors in other proxy contests." The following examples of Pinnacle/Red Oak's aggressive tactics with other
issuers were relied upon by the Company in making this statement: </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
February 2009, CLST Holdings,&nbsp;Inc. ("CLST") filed a lawsuit in federal court against Pinnacle/Red Oak alleging that Pinnacle/Red Oak had engaged in numerous
violations of federal securities laws in making recent purchases of CLST common stock and seeking to enjoin future unlawful purchases of such stock. A month later, Pinnacle/Red Oak filed a derivative
lawsuit against the CLST board alleging violations of director fiduciary duties. As a result of this pending litigation, the CLST board determined to delay CLST's annual stockholders meetings from its
previously scheduled date of May&nbsp;22, 2009 to September&nbsp;25, 2009. </FONT><FONT SIZE=2><I>See</I></FONT><FONT SIZE=2> CLST's Form&nbsp;10-Q filed on April&nbsp;14, 2009. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pinnacle/Red
Oak acquired significant shareholdings SMTC Corporation ("SMTC") prior to SMTC's 2008 annual stockholders meeting, commenced a proxy fight over the
underlying director elections, and ultimately garnered a settlement agreement with SMTC prior to the date of the meeting. Specifically, in a 4-month window in early 2008, Pinnacle/Red Oak
increased its holdings of the outstanding SMTC common stock from 5.08% to 17.2%. </FONT><FONT SIZE=2><I>See</I></FONT><FONT SIZE=2> Pinnacle/Red Oak's amended Schedule&nbsp;13G filings in January
2008 and eventual Schedule&nbsp;13D filing on April&nbsp;1, 2008. Within its initial Schedule&nbsp;13D filing, Pinnacle/Red Oak announced its intent to nominate four directors for election to
the SMTC board and noted: "If we must engage in a proxy contest, we are prepared to do so in an expeditious and civil manner." SMTC filed its preliminary proxy statement for the annual stockholders
meeting on June&nbsp;10, 2009 and entered into a settlement agreement with Pinnacle/Red Oak six days later. </FONT><FONT SIZE=2><I>See</I></FONT><FONT SIZE=2> SMTC's Form&nbsp;8-K
filed June&nbsp;16, 2008. Pursuant to the settlement agreement, SMTC made numerous concessions to Pinnacle/Red Oak regarding the ultimate composition and structure of the SMTC board, among other
items. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Rule&nbsp;14a-9</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>17.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The Company will omit the reference to "may be deemed" in future filings. </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Instruction&nbsp;3 to Item&nbsp;4 of Schedule&nbsp;14A</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>18.</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We understand that the information required by Rule&nbsp;14a-12(a)(1)(i) should have been
included in the soliciting materials and that a reference to a future filing is not sufficient to comply with the requirements of such rule. All future soliciting materials made by the Company
pursuant to Rule&nbsp;14a-12 will comply with such requirements. </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>[</FONT><FONT
SIZE=2><I>Rule&nbsp;14a-12(a)</I></FONT><FONT SIZE=2>] </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>5</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Should
any member of the Staff have any questions or additional comments regarding the Amendment or the responses to the Staff's Comment Letter set forth above, please do not hesitate
the call the undersigned at (817)&nbsp;420-8225 or Mark G. Johnson at (214)&nbsp;745- 5600. </FONT></P>

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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Best regards,</FONT></TD>
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<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>/s/ Justin A. Hoover<BR>


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</FONT> <FONT SIZE=2> Justin A. Hoover</FONT></TD>
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<P style="font-family:times;"><FONT SIZE=2>
JAH:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ael<BR>
Enclosures </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>cc:</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Nancy
L. Harris (w/ encl.)<BR>
Jay Peterson (w/ encl.)<BR>
Mark G. Johnson (w/ encl.) </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2><U>Exhibits</U> </FONT></P>

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<TD style="font-family:times;"><FONT SIZE=2>A</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Pinnacle/Red Oak's January&nbsp;29, 2009 email</FONT></TD>
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<TD style="font-family:times;"><BR><FONT SIZE=2> B</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Pinnacle/Red Oak's November&nbsp;26, 2008 email</FONT></TD>
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<TD style="font-family:times;"><BR><FONT SIZE=2> C</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Pinnacle/Red Oak's December&nbsp;2, 2008 email</FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6</FONT></P>

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